'Somewhat troubling'

It said the "spy" had met Mr Walton - then an acting detective inspector, who had been seconded to the Met's Lawrence review team, responsible for making submissions to the Macpherson inquiry.

The report found Mr Walton's account of the meeting "less than straightforward to establish and somewhat troubling".

Sir Bernard said the decision to move Mr Walton from his post as head of the Counter Terrorism Command to a non-operational role had been taken in light of the seriousness of the allegations.

The Met has voluntarily referred the matter to the Independent Police Complaints Commission (IPCC).

Stephen was 18 when was he was killed in a racially-motivated attack

The chair of the IPCC, Dame Anne Owers, has apologised to the Lawrence family for its 2006 investigation.

The Ellison review, she said, made clear that the IPCC had been wrong to conclude there was no evidence to suggest the Met withheld information relating to corruption from the Macpherson inquiry.

"I fully recognise this has prolonged by many years the Lawrence family's search for the truth about the failed investigation into their son's murder," Dame Anne said.

The Special Demonstration Squad (SDS)

The SDS was a top secret squad within the Metropolitan Police Special Branch, and was operational from 1968 - in the wake of violent anti-Vietnam War demonstrations - to 2006

It specialised in the long-term undercover deployment of officers into a range of groups that had the potential to cause serious public disorder or other violence or injury

Officers who carried out undercover work for the SDS were given a lifetime guarantee by the Met that their identity would be protected

In his report, Mark Ellison QC said there were many examples of SDS undercover officers running great risks to themselves in order to gain very valuable intelligence

The group searched gravestones for the names of young children who would have been a similar age to provide an under cover identity

The group reportedly became known as "the hairies" because of the long hair and beards considered essential to blend in with some of the the groups being targeted

"I have today written to Baroness Lawrence and Mr Lawrence to apologise for our part in this."

Former Director of Public Prosecutions Lord Macdonald said policing was now "scraping the bottom".

He said Sir Bernard's comments - in the wake of the Ellison report - "reeked of complacency", and called for a Royal Commission on policing.

Earlier, Lord Condon, Met commissioner in 1993, said he did not authorise or know of "any action by any undercover officer".

The peer, who held the top post at Scotland Yard between 1993, when Stephen Lawrence was killed, and 2000, said: "Had I known I would have stopped this action immediately."

He added: "I think it's for the public inquiry to establish why I didn't know and whether that was stupidity, whether that was ignorance, whether that was deception, whether it was deliberately keeping issues from me because it was known that I would not have approved of them."

The lawyer representing Stephen's mother urged the Met to co-operate "fully" with the new investigation.

Baroness Lawrence called on Sir Bernard to take "relevant and appropriate action" against those identified in the Ellison review.

A letter sent to him on her behalf said revelations in the review had been a "devastating blow" and added: "Nothing short of immediate and decisive action by you will begin to help build the trust needed to go forward."

The Ellison review also found it could not be ruled out that corruption may have compromised the investigation into Stephen's killing in 1993.

It was one of several revelations to emerge about the Met's former undercover unit, the Special Demonstration Squad (SDS), in the review of the original handling of the case.

'Considered response'

On Thursday, Home Secretary Theresa May told MPs the findings in the Ellison report had damaged the police and ordered the public inquiry.

The Ellison report found an SDS "spy" had worked within the "Lawrence family camp" during the Macpherson Inquiry, conducted in the late-90s to look at the way the police had investigated the murder of Stephen.

It also found that the Met's own hard copy records of a broad investigation into possible corruption had been subject to a "mass shredding" in 2003.

It warned that the "chaotic state" of the force's records meant that a public inquiry might have "limited" potential to find out more information.

But Sir Bernard told the BBC that an "independently-led, multi-disciplinary team" would be brought in to go through the Met's records.

He said the scale of the task would be "immense" and that every computer and building would be searched. "I need to be sure that we looked everywhere possible," he said.

He said he could not account for the "mass shredding" of 2003, because he was not there.

Earlier, he told the Evening Standard the Ellison report had been "a devastating report for the Metropolitan Police and one of the worst days that I have seen as a police officer".

He said it had been "awful" to see the impact on Stephen Lawrence's family, for whom he had "enormous respect".

London Mayor Boris Johnson said Sir Bernard was right to want to build confidence in the Met - "and as fast as possible".

He described the Ellison report as "deeply disturbing" and said: "It is sickening to learn that a police officer charged with investigating the murder of Stephen Lawrence was potentially in the pay of the family of one of the killers."

Mr Johnson added it was "vital" that the truth come out and that any corrupt or criminal police behaviour should be prosecuted with the "full force of the law".

The Ellison report found "substantial arguments on either side" of whether a former detective admitted to being in a corrupt relationship with the family of a suspect while working on the Lawrence murder investigation.

'Suffered too much'

This, the report said, was "an unresolved issue".

Earlier, Prime Minister David Cameron said he expected the public inquiry to get to the truth of the Stephen Lawrence murder case. He described Thursday's revelations as "very shocking".

"It should not have taken this long and the Lawrence family have suffered far too much," Mr Cameron said.

Stephen, a black teenager, was 18 when he was stabbed to death in an unprovoked attack by a gang of white youths in Eltham, south-east London, in April 1993.

However, it was not until 2012 that Gary Dobson and David Norris were found guilty of murdering him and sentenced to minimum terms of 15 years and two months and 14 years and three months respectively.

Mrs May said she had commissioned Mr Ellison, and the Crown Prosecution Service and attorney general, to conduct a further review into cases involving the SDS - a top secret Met police squad that was operational until 2006.